According to lawyers for lead plaintiff institutional
investor
Carlson Capital, L.P., a private money management fund, the
suit alleged a breach of fiduciary duty against Sprint
directors and management in connection with a stock
conversion.
The lawsuit centers on the company’s handling of a
complex conversion of stock in which two separate tracking
stocks – PCS and FON – were “recombined” into a
consolidated common stock. The transaction brought
“substantial” profit to directors and management at
shareholder expense, the plaintiffs charged, according to
law firm
Grant & Eisenhofer P.A..

The suit alleges that the company illegally
engineered a stock recombination by manipulating
conversion ratios of the tracking stocks, grossly
overvaluing Sprint’s declining land-line business. It
points the finger of blame at former Sprint CEO William
Esrey and COO Ronald LeMay, both of whom were forced to
resign in 2003.

Last fall, several months after the shareholder
lawsuit was filed, Sprint took a $3.6 billion write-off
on the FON operations, according to the plaintiffs.
The case is scheduled for trial in early 2006.